How to take the risk out of international telco trades

We now take it for granted that we can instantly make a call to anyone in the world from a small device in our hand. However, it’s not that long since, for example, anybody wanting to make a transatlantic call had to book it in advance.

Most calls between populated countries are carried through big local providers. For example, BT and Telstra have a deal to carry each other’s traffic. BT carries Telstra’s calls to the UK and Telstra carries BT‘s calls to Australia; if there is an imbalance, the provider in question pays the difference.

With more remote destinations, however, a greater element of risk enters into the transaction. The providers to these destinations are generally smaller and carry less financial clout. This presents two main risks, as Neil Kitcher, CMO at RTX says:

"Global carriers have got 30, 60, 90 day payment terms, so the niche supplier will be out of business [before they get paid.] They are small players relative to the global carriers, so they will need to get paid relatively quickly."

The same goes from the other side; the global carriers have their own difficulties dealing with their niche counterparts.

"Back in the day, voice was a bit like the Wild West. SMS is a bit like it at the moment. There was quite a lot of bad debt in the marketplace. That continues today; some of the large carriers still lose money."

It was for this reason that RTX Routetrader Exchange was launched by sales director Andrew Jacobs, and CTO Dave Roarty.

"We sit in the middle as the white knight, ensuring the customers and suppliers can do business without any risk."

The platform allows telecoms providers from large to small to buy and sell voice and SMS traffic.

RTX "enables [big players] to get access to some of the smaller customers that they would have traditionally rejected because it was too difficult to deal with them and they were worried about bad risk.

"There was already a trading market in telecoms and we are automating that in a very safe ecosystem where we ensure the suppliers get paid and those payments are insured, or they pay as they go if they don’t pass our stringent financial checks."

The platform also aims to streamline the buying and selling process.

"We have a rate sheet with a full list of international destinations and a break-out of cities with different codes within those cities. There is a wholesale marketplace for all those routes and people buy amongst each other in the wholesale space; that’s where we sit."

"If you’re trading oil and gas or equities, there will be different providers who have better rates for provision of oil and gas and maybe better priced equities. It’s the same with the telecoms market; people will have better rates for any number of reasons."

Currently the RTX platform is only used to trade voice and SMS messages, but there are plans to launch a data exchange in 2016.

"Data is a key one telcos would love to solve. It is a 2016 product because data is only really lending itself from a point-to-point (P2P) connectivity to a network now. Traditionally peer-to-peer connectivity from say London to New York would be on a 12 or 36 month contract.

"Now, with software-defined networks it becomes more usage-based. You pay for your data as you use it rather than on a contractually fixed term. 10GB over 36 months becomes, once you’ve set up a connection, paying per MB."